DOJ Files Forfeiture Action Against Accounts Used In the Siemens Bribery Scandal

15 January 2009 Publication

In January 2009, the Department of Justice ("DOJ") filed a forfeiture action against bank accounts located in Singapore in the names of Zulfikar Ali, Fazel Selim, and ZASZ Trading and Consulting Pte Ltd. ("ZASZ"). According to the DOJ's complaint, these accounts were used by Siemens and another company to bribe foreign officials in violation of the FCPA, specifically Arafat Rahman ("Koko"), the son of former Bangladeshi Prime Minister Khaleda Zia. The DOJ alleges that the illicit funds in these accounts flowed through U.S. financial institutions thereby subjecting them to U.S. jurisdiction.

As described in the complaint, U.S. law enforcement authorities determined that Bangladeshi government officials and several members of their families received bribe payments from corporations seeking Bangladeshi government contracts. According to the complaint, a majority of these bribes were paid in, or funded with, U.S. dollars and were transacted through U.S. financial institutions. The complaint alleges that Siemens Bangladesh Limited ("Siemens Bangladesh") and China Harbor Engineering Company ("China Harbor") made bribe payments to Koko so that he could influence the bidding process in connection with government projects and to ensure that he would not obstruct the award of the projects. In December 2008, Siemens Bangladesh, along with Siemens Aktiengesellschaft pleaded guilty to FCPA violations. The plea agreement contained an admission that the company paid bribes to secure a Bangladeshi government contract. According to the complaint, Defendants Ali and Selim were business consultants hired by Siemens to facilitate the bribe payments to Koko. The complaint further alleges that Ali transferred money to the ZASZ account, an account which belonged to Koko. The complaint alleges that China Harbor also made payments to the ZASZ account for the benefit of Koko in connection with a separate government contract.

In announcing this action, Acting Assistant Attorney General Matthew Friedrich said that the action "shows the lengths to which U.S. law enforcement will go to recover the proceeds of foreign corruption ..." and that the DOJ will not only prosecute companies and executives who violate the FCPA, but will also use forfeiture laws "to recapture the illicit facilitating payments often used in such schemes." Both Bangladesh and Singapore authorities are assisting the DOJ in this matter.